Landmark Bancorp, Inc. (NASDAQ: LARK) reported a significant increase in full-year profitability for 2025, driven by a widening net interest margin and robust annual loan growth. The bank holding company disclosed full-year net earnings of $18.8 million, a 44.4% increase from the $13.0 million recorded in 2024. Following the announcement, the company’s Board of Directors declared a quarterly cash dividend of $0.21 per share, marking the 98th consecutive quarter of cash distributions.
Quarterly Performance and Net Interest Trends
For the fourth quarter ended December 31, 2025, Landmark reported net earnings of $4.7 million, or $0.77 per diluted share. This represents a substantial year-over-year improvement compared to the $3.3 million, or $0.54 per share, earned in the fourth quarter of 2024. However, results were slightly lower on a sequential basis, down from $4.9 million in the third quarter of 2025.
The primary driver for the year-over-year growth was the continued expansion of net interest income, which reached $14.8 million in the final quarter of 2025—a 19.3% increase compared to the same period in the prior year. The tax-equivalent net interest margin (NIM) climbed to 4.03% in the fourth quarter, up from 3.51% a year earlier and 3.83% in the third quarter of 2025. This margin expansion was largely attributed to higher yields on earning assets and a strategic reduction in funding costs, particularly within deposit and borrowing channels.
Executive Commentary and Strategic Review
In a statement accompanying the results, Abigail Wendel, President and Chief Executive Officer, noted that the fourth quarter performance concluded a year characterized by significant revenue expansion and increased profitability. She highlighted that the organization achieved net interest income growth in every quarter of 2025, supported by rigorous pricing discipline and an 11.5% year-over-year increase in average loans. Wendel also emphasized that while the company maintained focus on expense management, it continued to invest in personnel and technological capabilities to support future growth.
Mark Herpich, Chief Financial Officer, added that the quarterly earnings growth was fundamentally supported by the bank’s ability to drive asset yields higher while successfully lowering overall funding costs. He specifically pointed to the strengthening of the balance sheet, noting that year-end deposits reached $1.4 billion, bolstered by significant seasonal inflows in the fourth quarter.
Balance Sheet and Asset Quality
Landmark’s balance sheet reflected steady growth in deposits despite a slight seasonal contraction in certain loan categories toward the end of the year. Total deposits rose to $1.4 billion at year-end, an increase of $63.4 million during the fourth quarter alone. This growth was primarily fueled by money market and checking accounts, which saw an influx of $71.6 million, largely due to seasonal public fund activity.
On the lending side, gross period-end loans totaled $1.1 billion. While the fourth quarter saw a minor sequential decrease of $6.3 million—driven by declines in commercial and one-to-four family residential real estate—the full-year trajectory remained positive. Average loans for 2025 grew by $112.3 million, or 11.5%, supported by strong originations in commercial real estate and residential mortgages.
Asset quality metrics showed notable improvement throughout the year:
Non-performing loans: Decreased to $10.0 million, a 23.8% reduction from year-end 2024.
Net charge-offs: Totaled $341,000 in the fourth quarter, a sharp decline from the $2.3 million recorded in the third quarter, which had been impacted by a single commercial credit event.
Allowance for credit losses: Stood at $12.5 million, representing 1.12% of gross loans at year-end.
Efficiency and Capital Strength
The company’s efficiency ratio—a key measure of non-interest expense as a percentage of total revenue—improved to 62.7% for the full year 2025, compared to 69.1% in 2024. Although non-interest expenses rose by $1.0 million sequentially in the fourth quarter due to higher compensation, professional fees, and a valuation allowance on repossessed assets, the bank maintained positive operating leverage for the year as revenue growth outpaced overhead increases.
Capital levels remained robust, with stockholders’ equity rising to $160.6 million as of December 31, 2025. Book value per share increased to $26.44, while tangible book value per share grew to $20.79, representing a 24% increase over the previous year-end.
Industry and Macro Context
Landmark’s performance reflects a broader trend among mid-sized regional banks in early 2026, where disciplined deposit pricing and a shift toward higher-yielding commercial real estate loans have offset the pressures of a volatile interest rate environment. By lowering its cost of interest-bearing deposits to 2.06% in the fourth quarter, Landmark successfully mitigated the industry-wide challenge of rising funding costs.
The bank’s strategic focus on the Kansas market and its diversified lending portfolio—spanning agriculture, commercial real estate, and residential housing—positioned it to capture growth while reducing its non-performing asset ratio. Investors continue to monitor the bank’s ability to maintain its 4% net interest margin threshold as the Federal Reserve’s monetary policy evolves through the first half of 2026.
Reasons to Pass on LARK
- Sequential earnings dip: Fourth-quarter net income declined from the prior quarter, signaling softer near-term momentum.
- Seasonal deposit reliance: Much of the late-year deposit growth stemmed from seasonal public funds, raising questions about durability.
- Quarterly loan decline: Period-end loans fell sequentially, reflecting weakness in commercial and residential real estate balances.
- Margin peak risk: Earnings are heavily reliant on NIM expansion, which may be difficult to sustain above 4% as rate conditions shift.
- Expense creep: Non-interest expenses rose sequentially, potentially pressuring efficiency if revenue growth moderates.
- Geographic concentration: Focus on the Kansas market limits diversification and increases exposure to local economic conditions.
- Commercial real estate exposure: Growth in CRE lending ties results to a rate-sensitive and cyclical sector.
- Small-bank scale: Limited size may constrain competitiveness and shock absorption relative to larger peers.
